A little known export restriction in one Canadian province is hurting the entire country’s logging industry…
The Trump administration’s decision to levy a 20 percent tariff on Canadian softwood lumber confused many Americans and Canadians not following the issue closely. But an analysis of the situation by The Globe and Mail revealed a little-known export restriction in British Columbia is hurting the entire country’s lumber industry:
The prevailing narrative is that the U.S. hit Canada with duties of up to 24 per cent because the provinces are selling their timber too cheaply to lumber companies – thus, a subsidy, so the Americans say.
That’s only part of the story. A significant chunk of the penalty is due to log export restrictions that exist only in British Columbia.
The bizarre, and arguably unfair, result is that lumber producers across the country are being punished for the forest policies of one province.
Without British Columbia’s export restrictions, which have been in place since the 1880s, the tariff on Canadian lumber would likely be just a slap on the wrist. Instead, it will cost lumber companies hundreds of millions of dollars every year.
Economists in Canada have warned for years that the policy lessens competition for logs, increases the supply of timber available to mills in B.C. and suppresses prices by up to 50 per cent. And that lowers the cost of finished lumber, such as two-by-fours, destined for the U.S. market.
And it’s not just the United States objecting to the policy. The Globe and Mail reported that Japan, China, and South Korea have all complained about the log-export constraints in British Columbia.
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